Wednesday

22nd Feb 2017

China to overtake EU and US by 2030, US intelligence says

  • The Chinese economic powerhouse will overtake Europe and the US by 2030 (Photo: Patrick Rodwell)

The era of American and European economic dominance has less than two decades left to run, according to a report by US intelligence services.

The study - Global Trends 2030, out on Monday (10 December) - predicts the Chinese economy will overtake the US at some point between 2022 and 2030.

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It says the once dominant trio of the US, Europe and Japan will see their share of world trade fall from 56 percent to well below half in 2030.

It also notes that China and India are not the only rising Asian countries to tilt the balance of world power from west to east.

Another group - the so-called Next Eleven, comprising Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea and Vietnam - is tipped to overtake the EU-27 in terms of collective GDP by 2030.

The report, by US National Intelligence Council (NIC), is timed to coincide with the start of President Barack Obama's second term in the White House.

Its section on Europe offers a bleak view of the impact of the sovereign debt crisis.

"The eurozone crisis has laid bare the tensions and divisions between member states and, for the first time in decades, raised fundamental questions about Europe's future," it says, adding that the post-crisis Union "would not resemble today's Europe."

Its scenarios for the eurozone include the collapse of the euro and then the EU itself.

But it also sees the possibility of EU leaders making a "federalist push" leading to a European "renaissance."

Under this model "Europe is well on its way to completing the original concept of a comprehensive economic and monetary union [and] ... will emerge much stronger as a result."

However, while the report states that "more integration probably will be required to overcome the crisis and address structural problems" it admits that domestic political concerns mean that "massive transfer of sovereignty may be a bridge too far" for most countries.

It says this could lead to a multi-speed Europe, with a core group of countries pursuing deeper integration and others choosing either to "opt-out" or adopt a "wait-and-see" policy.

Germany is expected to remain Europe's political leader because of its economic growth prospects, but its economic wellbeing will be put at risk by an ageing population.

It notes that "Europe's Muslim population will double from 4.1 percent to 8 percent" bu 2030.

The world population is projected to rise by around 15 percent to 8.3 billion people, up from 7.1 billion in 2012.

Unveiling the report, Christopher Kojm, chairman of the NIC, said that "the spectacular rise of Asian economies is dramatically altering ... US influence."

For his part, Mathew Burrows, the lead author of the paper, said Western economic decline is "not inevitable."

He added that "in most cases, [the situation] is manageable if you take measures ... now."

Focus

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Chinese Prime Minister Wen Jiabao on Thursday offered vague promises to buy bonds from troubled euro-countries, but said that it is ultimately up to Germany and France to solve the crisis.

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